There is growing evidence that tyrosine phosphatases display an intrinsic enzymatic preference for the sequence context flanking the target phosphotyrosines. On the other hand, substrate selection in vivo is decisively guided by the enzyme-substrate connectivity in the protein interaction network. We describe here a system wide strategy to infer physiological substrates of protein-tyrosine phosphatases. Here we integrate, by a Bayesian model, proteome wide evidence about in vitro substrate preference, as determined by a novel high-density peptide chip technology, and "closeness" in the protein interaction network. This allows to rank candidate substrates of the human PTP1B phosphatase. Ultimately a variety of in vitro and in vivo approaches were used to verify the prediction that the tyrosine phosphorylation levels of five high-ranking substrates, PLC-γ1, Gab1, SHP2, EGFR, and SHP1, are indeed specifically modulated by PTP1B. In addition, we demonstrate that the PTP1B-mediated dephosphorylation of Gab1 negatively affects its EGF-induced association with the phosphatase SHP2. The dissociation of this signaling complex is accompanied by a decrease of ERK MAP kinase phosphorylation and activation.